The Balance of Payments deficit in July widened to $1.8 billion from a surplus position of $642 million for the same period last year. This is because of national government's withdrawal from the Bangko Sentral to pay for debts and various expenditures.
The country’s overall balance of payments (BOP) position posted a deficit of $1.8 billion in July 2022, a reversal from the $642 million BOP surplus recorded in the same month last year. The BOP deficit in July 2022 reflected outflows arising mainly from the National Government’s (NG) foreign currency withdrawals from its deposits with the Bangko Sentral ng Pilipinas to settle its foreign currency debt obligations and pay for its various expenditures.
The BOP deficit in July brought the cumulative BOP level for January-July 2022 to $4.9 billion deficit, higher than the $1.3 billion deficit recorded in the same period last year. Based on preliminary data, this cumulative BOP deficit reflected the widening trade in goods deficit.
Based on preliminary data from the Philippine Statistics Authority’s (PSA) International Merchandise Trade Statistics (IMTS), the trade deficit for January-June 2022 reached $29.8 billion, up from the $18 billion deficit posted in the same period last year.
The gross international reserves level declined to US$99.8 billion as of end-July 2022 from $100.9 billion as of end-June 2022. Nonetheless, the latest GIR level represents a more than adequate external liquidity buffer equivalent to 8.3 months’ worth of imports of goods and payments of services and primary income.
Specifically, it ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans.
Moreover, it is also about 7.2 times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity.
Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
Tags: #BOPdeficit, #BSP, #NGwithdrawals, #debtpaymentsandotherexpenditures